Elizabeth Warren made a very interesting comment at a recent campaign stop. The video and quotes from it are “going viral” — I’ve seen at least 4 re-postings on Facebook, and numerous tweets.

Warren is seeking to be the new Senator in the State of Massachusetts. I wish her well, she’s a very intelligent woman with a heart. Her statement can be viewed on video here, but to sum up, she’s saying that wealthy people don’t do it alone. She says those who make a lot of money did it with the support of the society around them, including roads, educational systems (educated employees), police and fire protection. These are things that aid an entrepreneur to innovate and make money, and, we all pay for those enabling things. We all pay taxes, so, we all support, in some way, the infrastructure that surrounds innovation and helps bring new ideas, products, and services, to market. Because of this, wealthy people “owe” the system and need to pay back into it to help the next entrepreneur be successful. She did not use the word “owe” — that’s my spin.

I agree. It’s a common sense statement and it’s really resonating out there.

I feel compelled to add some further thoughts about taxation and the concept of class warfare — as they relate to innovation (and wealth creation). The simple thesis here is:

There needs to be a level playing field. Without it, there will be class warfare.

If a child born today grows up and gets a decent education, has basic good health, and is willing to work hard, they have a chance.  In a level playing field society, there is a chance for everyone. This is the holy grail, but let’s assume something close to a level playing field can be created. Then, the average Joe or Jane, feels they have a chance. If you have a chance and blow it because of your own stupidity, lack of ambition, focus, or creativity — you can blame nobody but yourself. If you don’t have a chance to begin with, or, a snowballs chance in hell, you will blame others. And in my view, this is where class warfare starts. Blame, jealousy and coveting thy neighbor’s goods are encouraged by not having a chance to get your own.

Income taxation for the poor is not the answer. Why would we add taxes to those least able to pay? How does that get them on the field playing the entrepreneurial game? I mention this because this is what Mitt Romney is saying at the moment, that poor people need to put some skin in the game. These are the kinds of statements that ignite class warfare.

I get that conservatives are for less taxation. So am I!  Conservatives are also for fair taxation, and again, I agree.  But what’s fair? This is where we’ll argue. Conservatives are for smaller government, and again, I agree. If it’s not helping to create a more level playing field, or support things that the free market won’t do, in my view, it’s useless (can we get rid of Congress altogether and just vote directly via the web?). We’ll argue about what’s necessary for government to do. For instance, some regulation is a very good thing (I once owned Enron stock, dodged the Madoff bullet). Too much regulation does indeed get in the way, but when we argue about regulations, let’s think about how those regulations support an entrepreneurial society or don’t. Clean air and water, for example, are basic requirements for health (see health section below). Support of NPR and arts grants? I’d argue for them as part of on-going education and inspiration, but would understand if others didn’t see it that way. Military spending? I’d argue we’ve become the world’s policeman and we don’t have to be. In my view that money would be better spent on basic science research that helps us create new markets.

First of all, let’s do away with the notion that not all of us pay taxes. In the USA, we may not all pay federal income taxes, but even the very poor pay taxes at the grocery store, gas pump, toll roads, and have myriad deductions on their meager paychecks. Proportionally, it could be argued, poor people pay the most in taxes. Certainly, without a doubt, poor people are the ones who are “keeping us free” as they are about 50% of the armed forces, and that figure is trending higher in these tough economic times. Poor families in high percentages pay the ultimate tax — loss of life. Mr. Romney, I’d call that “skin in the game.” And if we aren’t free, we can’t innovate, we can’t become wealthy as individuals, or a prosperous society. It’s interesting to me that Elizabeth Warren left military service off her laundry list of things we collectively do to create the “free market.”

I believe that if we want more innovation, we as a society need to put in place the conditions that allow it to happen. Sometimes things like education can be organized without government help. Sometimes they can’t. If we want a level playing field, and I think we do, every child born needs to be given the opportunity to learn. They need to have at least the basic literacy and computational tools to go into the market and make something happen for themselves, let alone others. If we don’t find ways for the best and the brightest to get advanced training, we’re going to get beat by countries that find a way. This is strategic with regards to innovation and the national economy. Transportation is another necessary infrastructure for a level playing field. It’s simply not possible to find work, get to work, or be where the work is, unless there is a way to get there. Roads, bus and train systems, and airports are all necessary in order for an individual or a group to do well, to have an equal chance.

Healthcare is another area that matters with regards to innovation. Let’s get basic: you can’t create anything if you’re sick. Without basic health you can’t even play. This argues for, in my view, a health safety net, at the very least.  Better yet, proactive healthcare that creates healthy people from day one. And we’ll all be sick if we don’t have clean air, food, and water (see regulation).

Let’s face reality, resources and circumstances matter when it comes to becoming an innovator or entrepreneur. If you don’t think so, read Malcolm Gladwell’s book “Outliers” and then tell me I’m wrong. There is the very exceptional person who overcomes long odds to succeed. God bless em, but they are the exception, not the rule. There are a lot of talented people who don’t get a chance to bat in the entrepreneurial game, due to no fault of their own. My goal, and government’s goal ought to be…get more people in the game, more people taking a swing. That “swing” is what prevents class warfare and social unrest.

It’s not a perfect world, we can’t all be born rich, lucky, and with a slot preserved for us at Yale (or Notre Dame!). As I’ve been reminded many times, life is not fair. The USA is far from perfectly fair, but what’ s always been great about the USA is that compared to everywhere else, it’s close. Historically we’ve had the most opportunity. And part of that perception is having the most level playing field. People came here in the past because they knew they had a chance, because there was hope they could do better, or at least their kids could do better. The USA has always been the best in terms of giving people a fair shake, a decent chance. Not perfect by any means, but our progress as a nation can be measured by how well we do in improving, and we have improved over the years. That’s a legacy to be proud of and I think that’s the sentiment behind Elizabeth Warren’s recent words.

If we want long term prosperity, brought about by long term consistent innovation, we need to preserve, protect, defend, and improve the level playing field. Without it, we’ll be mired in class warfare — and we’ll have done it to ourselves.